TOTAL (TOT) Expands Presence In North Sea With New Discovery

TOTAL S.A. (NYSE:TOT) announced that along with its partners it has made a discovery with the Isabella 30/12d-11 well on the license P1820, located in the Central North Sea offshore U.K. The offshore new discovery is located nearly 25 miles (40 kilometers) south of the Elgin-Franklin Field and 106 miles (170 kilometers) east of Aberdeen.

The well was drilled in a water depth of about 263 feet (80 meters) and encountered 210 feet (64 meters) net pay of lean gas and condensate and high-quality light oil, in Upper Jurassic and Triassic sandstone reservoirs.

TOTAL already has a significant presence in the region following acquisition of Maersk Oil in 2018. Johan Sverdrup field was added to TOTAL’s portfolio post acquisition of Maersk Oil. Notably, commercial operation for Phase 1 of the field commenced from Oct 7, 2019, nearly two months ahead of schedule.

Development Amid Falling Prices

This new discovery from TOTAL in North Sea is undoubtedly good news in the oil and space when a majority of U.S. shale-based oil and gas companies are cutting down capital expenditure. Companies belonging to the oil and gas sector including Occidental Petroleum Corporation (NYSE:OXY) , Devon Energy Corporation (NYSE:DVN) and Murphy Oil (NYSE:MUR) are cutting down on capital expenditures to preserve liquidity and slowing down expansion plans amid the falling oil prices.

The decline in commodity prices, primarily due to reduction in global demand as the novel coronavirus has impacted global economic growth. Governments worldwide are issuing directives related to travel, temporary closure of schools, factories, offices, and asking people to avoid mass gatherings, which are adversely impacting demand for crude. Additionally, the decision of Russia and Saudi Arabia — the major producers of crude apart from the United States — to produce more crude volumes could further lower the price of the commodity from the current level due to supply glut.

TOTAL’s Goal

TOTAL expects to achieve the targeted organic production growth of 2% in 2020 on the back of new start-ups. TOTAL stands to benefit from its initiatives to lower operating expenses, strategic acquisitions and agreements, all of which continue to expand its operation globally.

However, like the other oil and gas majors the decline is prices is also hurting TOTAL’s operation and the company had registered a significant decline in share prices in the past 45 days.

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